Two Clients, One Industry – Trouble?

I started webworking when I moved out of the geographic area of my former company. They retained me on a contract basis, but I worked exclusively for them for 3 years. I recently took on a new client and have been with them for a couple of months. Now, through no involvement of mine, these two companies are contemplating a business relationship.

Here’s my question. If they do decide to work together, am I under any ethical obligation to disclose to either company the fact that I’m doing work for the other? The work I do for each company is completly unrelated to the other and is strictly back-end (DBMS/data analysis). At this time, I don’t perceive any conflict of interest, but is that all that counts?

This particular question has several dimensions – legal, ethical, and practical. Let’s take them one at a time:

On the legal front, I hope you’ve got signed contracts with both companies. Assuming that you do, and that neither contract includes a restrictive noncompete clause, you should be covered. The paper will spell out your other legal obligations: for example, to hold each company’s information confidential. Presumably it also makes it clear that you’re an independent contractor, rather than an employee, and thus expected to have other clients.

On the ethical level, things are a bit trickier. One question to ask yourself is whether you’d be comfortable if you were the customer, and one of your contractors was doing what you’re doing. You don’t make it clear whether the two companies in question are competitors or frenemies or what, but if they do compete, that sets off a red flag in my mind. Even if you’re keeping the work completely separate, your clients may wonder if one or the other is getting more attention than is their due, while the other’s work gets neglected.

Finally, as a practical matter, I think it would be in your own best interest to disclose the situation. If the two companies are working together, that opens the possibility for your name to come up in the course of a casual phone call or over a lunch meeting: “Hey, we have this great data analysis subcontractor.” “Really? We have one too. His name is…” That situation would be very awkward for all concerned, including you.

To me, this looks like one of those situations where you’re best off making sure that everyone is happy with the arrangement, even if you’re not doing anything legally or ethically wrong. If it turns out that one of your clients isn’t on board, you have to ask yourself whether you really want a client who doesn’t trust your professional ethics. My experience has been that such clients are not worth the trouble they cause.